(Yicai Global) May 18 -- Chinese internet firm Sohu.Com Inc. will move its US unit to the Cayman Islands to establish a more efficient holding company structure, thereby removing an obligation to pay tax under President Donald Trump's tax legislation that passed in December.

Beijing-based Sohu will hold an extraordinary general meeting on May 29 to ask shareholders to approve the liquidation of the Delaware unit and cancel all of its outstanding common shares, Beijing News reported, citing Chairman and Chief Executive Charles Zhang.

Even if the firm has no staff or managers in the US, it will still have to pay corporate tax on certain overseas income under the new tax regime, said Zhang. The US Senate approved the first overhaul of the US tax code in more than 30 years at the end of last year.

Founded in 1996, Sohu offers advertising, search engine, gaming, and video-streaming services. Its Sogou Inc. unit, which runs China's second-largest search engine, listed American Depositary Shares in New York last November, raising CNY3.7 billion (USD585 million).

Those gains would also be subject to a 21-percent tax rate under the new legislation. If the company was located in the Cayman Islands, the sum would not be taxed, an industry insider told Yicai Global. 

If the proposal is implemented, the Delaware unit's ordinary shares will be converted one-to-one into ADS of the proposed Cayman Islands unit. The parent company's stock trading would not be affected.

Editors: Emmi Laine, William Clegg